Omer (00:11.280)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan, and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
In this episode, I talked to Mike Muhney, the founder and CEO of VIP Orbit, a software company focused on building great contact management products.
He launched their flagship product, VIP Orbit, in 2010 and they raised six and a half million dollars.
Recently, Mike had to shut down the business because he ran out of money and wasn't getting the traction that he'd hoped for.
So in this episode, he joins me to talk about the lessons that he's learned from a failed startup.
We have a very open and candid conversation about what he thinks led to that failure.
We explore the different factors, why he got into those situations, what are some of the lessons that he's learned from that and what he'd do differently now.
He was in a similar situation in the 1980s when he co founded a startup which eventually failed.
He'd raised $100,000 from an angel investor.
He ended up with $15,000 of that money left and needed to give back the money or come up with another idea.
And he and his co founder did come up with another idea which ended up being ACT Contact management software, which they went on to sell for $47 million.
So Mike was on the podcast some time back and you can hear the full story about act back then in episode 94.
So Mike is a seasoned and experienced entrepreneur who's seen the highs and lows of entrepreneurship.
And in this episode he's willing to talk about the tough parts of being an entrepreneur.
If you listen to this podcast regularly, you'll know that the majority of times we're talking about entrepreneurs successes.
And I try to get as much as I can out of them about what didn't go well, what failed and what they learned from that.
But this episode is different because the entire interview is about failure.
A whole business that failed and what lessons were learned from that.
So I hope you find it useful.
I certainly did.
Mike's a great guy and there are a lot of useful lessons here.
Mike, welcome back.
Mike Muhney (02:31.700)
Thank you, Omer.
Nice to be here.
Omer (02:33.940)
Let's start by getting into your head a little.
Is there a favorite quote or something you can share with us just to let us know about how you think about working on your business and what gets you out of bed every day?
Mike Muhney (02:46.570)
There's actually two of them.
I'll give you the first One that I have often used for self inspiration is from a poet by the name of John Greenleaf Whittier.
And it's simply this.
Of all sad words of tongue or pen, the saddest are these, what might have been.
I interpret that from my own life to mean execution.
You know, don't have an idea or sit on something and think you can do it, but you're afraid to do it.
You know, all of the above and more.
Go ahead, step into it and begin to do something with it.
Don't allow yourself to fall into the malaise of not doing something or being afraid to do it.
The second one is a quote from Churchill that is appropriate for my life and all many aspects of it.
And that is where he said, success is not final, failure is not fatal.
It is the courage to go on that counts.
And as an entrepreneur, actually both of those quotes are very appropriate.
Omer (03:45.600)
Have you seen that latest movie, the Churchill movie?
Mike Muhney (03:48.160)
I did, yes.
And I was surprised to see that quote at the very end of the movie.
He didn't speak it.
It was just a textual screenshot as they were doing the credits.
But I've been saying that for many, many years because I am a Churchill fan.
I've been to Chartwell and I've read his entire biography by Martin Gilbert, about 10,000 pages.
So I've long been a fan of his and the courage against O that he had.
Omer (04:14.220)
Yeah, I'll have to get out to see that.
I think it's called, what is it?
Darkest Hour.
Mike Muhney (04:17.260)
The Darkest Hour, yeah.
Omer (04:18.540)
Yeah, good.
Cool.
Okay.
So when you were on the show last time, we kind of have talked about two things.
We talked about what you had done with ACT content management software and the journey that you were on with VIP Orbit, your software company, or the flagship product which was known as Viper CRM.
And before we get into talking about Viper CRM, I want to kind of set the context for listeners maybe who haven't listened to the previous interview and to share your story with what happened with ACT.
So it was back in 1986, you'd co founded a software business that eventually failed.
But from that failure you came up with the idea for act, which you eventually went on to sell for $40 million.
And I think that on its own is a great story in terms of how success was found from failure and some of the things that we were just talking about.
But for people who aren't familiar with your story, can you tell us a little bit about what happened?
What was the software business you started out with and how did that lead to you working on act?
Mike Muhney (05:33.370)
So Pat Sullivan and I are the two inventors of act, both of us career sales guys.
I started my career with IBM in the mainframe era.
And selling, of course, is all about relationships.
And so it's what we did each and every day of our careers leading up to when we finally quit our jobs and started the company, which actually was in September of 85.
And our first product was what I will call a configurator, designed specifically for a targeted market and a segment within that targeted market, that being salespeople at computer stores back then, businessland, entree, places like that, where you once had to go to buy PCs.
As the industry was still fairly young, we raised $100,000 from an angel out of Boston for that product.
But to make a long story short, $85,000 later, Pat and I admitted to each other that this dog ain't going to hunt.
In fact, those were the exact words we used.
It was dog kind of dead on arrival.
We had exhausted $85,000 of the investor's money.
He thought everything was fine and he was actually coming down in about three weeks to check up on us and he thought everything was fine.
We hadn't told him the struggles and the conclusion we finally came to that it was a failure.
And one of the things that I had been taught at IBM was to always call it the CEO level, as funny as that may sound.
I had applied all of that IBM training to calling on the CEO of one of the big computer chains called Compushop, which was headquartered here in Dallas.
Fortunately, 54 stores.
He took a liking to me and it's important to inject him in the story because I really need to attribute to him, his name is John Purtel, the encouragement to do what we did that resulted in the creation of act.
And so what happened is I called him up and said that we were in trouble and could we come and talk to him to get some advice.
We didn't know what to do.
Should we give the 15,000 back to the angel investor when he was coming down, you know, what do we do?
So he met with us and this is what he said.
Very pivotal, very profound, but simple itself.
He said, look, you two guys are smart guys.
Next week is July 4th.
Why don't you go have a four hour brainstorm breakfast and see if you can come up with another idea.
Well, we could afford coffee and toast.
So Pat and I did go to a restaurant on July 4th.
We were literally in a booth at 8 o' clock in the morning.
And we said that we were going to sit there until noon to see if we can come up with another idea.
Now, we were both going back to that era.
Most people didn't have a laptop.
As a matter of fact, the laptops back then were so poor and expensive that they were hardly anywhere to be found.
But we were Power Daytimer users.
And so we began a conversation that started with, look, we have a blank sheet of paper.
We couldn't use the product that had failed ourselves because we didn't work at a computer store.
Is there anything that we need?
Is there something I wish that existed in the market that I could use myself to make me more successful, just be more productive, et cetera?
And that was both of our attitudes.
And so as we looked at the Daytimer sitting right there on the tabletop, we said, boy, we wish we could take that kind of an analog view, if you will, and create a software product that seamlessly integrated a lot of things that it is efficient in or inefficient with.
And that is, it didn't, number one, aggregate information around a central theme, the theme being a person.
There was the little spark, if you will.
And so we started saying, gosh, okay, if we did that, what would it need to do?
And we started talking functionally.
And with that function discussion, we then began to draft on the proverbial napkin the initial menu structure, if you will.
And so by the end of that four hours, there were some other aspects to it, but at the end of that four hours, Omer, when we left that restaurant, we knew we were onto something.
We were very excited.
And to finish the story in quick fashion here, the next three weeks, in preparation for the angel investor to come down, we completely architected the product.
I code named it yes, which stood for yes, Everybody Sells.
And so that when he came down, we could talk to him about another idea after we told him that the original product had failed.
When we were done expressing our hopes and enthusiasm toward this product that had been codenamed yes, what he said to us was, I didn't invest in Margin Maker, which was the name of the product.
I invested in the two of you guys, and I like this idea better.
Do you need any more money?
We had no idea that would be a response of his.
And we said, yes, as you can imagine, I mean, we were basically broke.
And he said, how much?
And we said, $50,000 spontaneously.
And he pulled out his checkbook and gave us a $50,000 check on the spot.
John Purtel, who had told Me about a month earlier to, you know, hey, have this breakfast and see if you can come up with another idea.
We met with him to bring him up to date from the time he told us to have the breakfast.
We did have it.
We came up with a product.
I hadn't updated John Purtel since he had originally suggested that we have this Brainstorm breakfast a month earlier.
So we got together with him.
I completely brought him up to date.
We took your advice, we had the breakfast.
We conceived a product code named yes.
The angel investor came down and he wrote us a $50,000 check.
He loved the idea that much.
And John Purtel said, I like that idea too.
As a matter of fact, I have two other guys that might be interested in looking at this as an investment.
Let me pull together a meeting and you guys do your pitch.
He pulled together the meeting, we did our pitch, and those guys wrote us $400,000 in checks.
And we had life.
And nine months later, we had released act on the market.
And I came up with the name ACT shortly before it was launched.
And it originally was meant to be an acronym that was meant to also be a word, but that acronym stood for Activity Control Technology with the exclamation mark.
And that's how it came about.
So we were near death.
We humbled ourselves, took somebody's advice who we respected, who was in the industry, and delved deeper into our own thinking and our gut, if you will, whatever.
And out of that desperation, Hail Mary pass.
Not only was the software category ultimately created called contact Management, nothing like that existed.
Software designed for people who deal with people, that today has led to the CRM industry.
It ultimately created a multi billion dollar industry that lives today.
Omer (12:13.320)
And this was before the days of the lean startup and customer validation and all the things that we hear today.
So back then, when you guys came up with the idea, did you feel like, okay, it's a good idea, but we need to go and do some kind of validation, we need to go and test it in the market?
Or what was it that made you feel so confident that this was the business that you were now going to invest your time and money in?
Mike Muhney (12:46.190)
First of all, there was no way, even today, that I would pretend to tell you that neither Pat or I had the vision of how big this thing could be and how universally applicable it could be applied across any industry and any type of user within any industry.
All we saw was an opportunity at that time to survive and to stay in business with something that seemed to have legs.
And it had enough legs, where if nothing else, there was a segment of industry that we knew people would embrace this concept, at least enough to give it a look.
And that was the classic salesperson back then in America.
I forget.
I think it was the Small Business association that we put in our original business plan.
There were 14 million, allegedly quote, unquote, quota carrying salespeople in America alone.
Well, that was a big market.
And again, there was also a transition from the paper era to this new thing called the PC.
Now, the PC had been out for a few years, don't get me wrong.
But these were still very early days.
And there were only three categories of software.
Primarily back then, spreadsheet software.
That was Lotus 1, 2, 3, word processing software.
And back then it was WordPerfect and Database, which was owned basically by Ashton Tate's Dbase product.
And that was primarily it.
I mean, there were some other ancillary things, but there were minor niche areas, if you will.
It was the Wild west era.
It was a time for just pure creativity and less sophisticated than today, much more opportunistic.
And so, no, there was no thought to let's have what today you might call an MVP and let's do a little bit of testing and let's do some analysis.
We just felt we could use this ourselves.
We were so passionate about it, as we described it to the people we were going after to raise money.
And they caught the bug, the contagiousness of it, of our passion.
And they saw the opportunity because they could relate to their own inefficiency in using paper systems.
They were beginning to use technology as well.
And the laptops was on the market.
I mean, you know, there was Zenith and Neck and Toshiba and Grid and Sharp.
And so you could see mobility beginning to emerge.
And who wouldn't want to have everybody they knew and everything they knew about everybody they knew and tied seamlessly to their calendar with them 24, seven in a device.
People didn't carry around their Rolodexes.
You know, some had tens of thousands of cards, right?
I mean, know you couldn't do it.
So they saw this as a means of, wow, I've got everything with me on demand kind of instant recall, photographic memory, executive assistant, if you will, through this product.
That was the thinking.
It was pure, raw, naive.
Go for the gusto right away.
And we found believers.
Omer (15:41.760)
You went on to sell that business for $40 million.
Mike Muhney (15:44.920)
47, actually.
Omer (15:45.920)
47, yeah.
Mike Muhney (15:47.430)
Two years before the Internet.
Omer (15:51.030)
And then in 2010, you launched a new business, VIP Orbit, and the flagship product became Viper CRM.
That business eventually failed.
And we're going to talk about some of the lessons you learned from that and why you believe that business didn't work out.
But again, for people who are not familiar, can you tell us a little bit about that product and what was your vision with this particular product when you set out?
Mike Muhney (16:23.030)
Okay, so deja vu all over again.
In 2004, I had abandoned Windows and went to the Mac.
Apple back then wasn't what they ultimately became as we know them today, but I wanted to be a Mac purist.
So I had to give up using act, my baby, my invention.
But being a purist was more important.
So fast forward back in 2007, the phone came out, the iPhone.
And of course I got one.
And for two years, I gave no thought to creating another company.
I just was fascinated, like people were back then with the iPhone and these few apps that existed back then.
Quarter of a million back in 2010.
And I finally got to the point at the end of 2009 where I could not believe that nobody had invented anything even approximating ACT that I had enjoyed in the Windows world for the iPhone.
Now, the iPad hadn't been announced yet.
The world didn't know that there was that coming down the pike.
So this was an iPhone only.
And of course Apple owned that smartphone market.
Google and all the various Android devices weren't really prominent at all back then.
The majority of people were going to the iPhone, and here I was one of them.
So I was so frustrated one day after reading an article in BusinessWeek magazine, the COVID story entitled Apps, and it said something like, it's more than fun and games.
There's businesses to be made.
Well, when I was done reading that article, Omer, it was very much like ACT when Pat and I sat down at that booth and we said, what do we need?
What do I wish existed that I need myself as a prompt of what to come up with?
And here I was with that same attitude.
Nobody has invented it yet.
I can't believe they haven't.
I need it, therefore I'm going to start a company to do it again.
Because I want this on my iPhone, which is now with me 24 7.
I could have only lusted after that back in the ACT era, you know, the technology wasn't available.
PalmPilot was the closest thing that came to into existence back in that era.
And ACT did run under the Palm Pilot.
With that, I set out to create more than an app.
I wanted to create a business.
My thinking always has Been because of act.
I'm not a product creator, I'm a business creator.
And in order to have a business, you've got to have a product with which you can sustain itself.
Also back then, and it's important to go back to the context of that time, even though it's only eight calendar years in high tech years, it was eons ago.
As far as differences between then and today.
Back then, like I said, there are only a quarter of a million apps.
People were willing to pay for apps.
You know, it wasn't unusual to find a $5, $10, $20, whatever, $50 app as people were getting accustomed to apps.
And so I raised money, a million dollars from an angel out of Austria who happened to be one of the most serendipitous things in my life that's ever occurred.
And I, to this day and to my dying day, will always be eternally grateful for not only his investment, but the kind of person he was for me during this era.
But he invested a million dollars and at the time the thinking only was to create an app for the iPhone.
Well, with it I hired an outsourced development firm who ended up using people in Russia, which was the quickest way to deliver a product solution to the market.
During the development of vypr for the phone, Apple announced the iPad.
Well now, unbeknownst to us, we only saw it as a very positive thing.
What we didn't see back then that I more clearly see today is that it began to entwine us in the Apple only world.
That ultimately ended up being part of the reason I had to shut down the business, that it failed because we, we had remained due to so much investment and time in the Apple products that it was a mistake.
But anyway, going back in that era, it represented another revenue opportunity.
The iPhone started out as a $10 one time cost.
Now Apple also, in my opinion, contributed to some of the reasons my business failed.
Up until fairly recently, Apple did not allow developers such as we were to have subscription pricing unless you were a content provider, in other words, like a magazine.
Well, we weren't a content provider, so we were disallowed from subscription based pricing.
Another policy that they had was once you pay for a product one time, you never have to pay again, ever.
No matter how many upgrades, updates the developer comes out with.
Which is not the way it worked in the Windows world.
With act, if you were a customer, you got a discount, but you had to still pay for the upgrade.
I mean, look at Windows today for example, right?
You're still paying for upgrades with each successive new version they come out with.
And so that hurt us financially.
But what really hurt us was the outsourced firm.
After developing the iPad version, which we were going to charge $20 for, we knew all along that we were going to need a sync product.
In other words, if a user now had an iPhone and an iPad.
And by the way, vypr was native app designed for the specific device to give the best customer experience.
That was the thinking, that was the rationale.
Well, we knew that people would want to have their data sync regardless of which Apple device they were now using.
And I was one of those people.
And so the statement of work from the outsource firm said that it would take 600 hours, approximately five to six weeks.
Well, that was very reasonable.
And what ultimately ended up happening, Omer, is it literally, no exaggeration, took one year.
It wasn't as if we went from six weeks to we need another, you know, ten and a half months.
It was we need another month.
Well, we need another month and another month and the delays and syncing is not easy to develop.
We chose not to use icloud because it wasn't very good.
Apple charged for icloud if you surpassed thresholds.
We didn't want to be accused of causing people to have to pay for icloud, so we wanted to have our own sync engine which we were going to charge for only to people that needed it.
And that was ultimately for a While our biggest moneymaker, $5 per user per month.
But we had to sell that product off of our website again because Apple didn't allow things like that to be sold.
So now we had to redirect people to our website and go through the process of how to connect everything.
It wasn't that difficult, but it was a little difficult to do that.
But ultimately our market changed and people started trashing us on the app store reviews.
How dare we charge for syncing?
You know, when you have companies like Facebook and Slack today, just a lot of products Evernote, what people didn't realize is those were cloud based products and so of course it would appear to sync, meaning it was useful across all your various devices.
Well, since we were native, we didn't have that capability and so people started trashing us and ultimately we had to stop charging for it.
Now at the same time people were saying where's your Mac version?
Here we go again.
Which I had a Mac too.
Of course we had to now dig deeper into more development toward the Mac to have the complete Apple line of family of products.
During that time though, Apple kept coming out with more operating systems and iOS 7 was a big operating system change.
Basically they went to a flat technology and we had outgrown the architecture of the vision, which had expanded during the original development team's efforts to wanted to do more, which I'll get to in a moment.
And so in a way it was a curse and a blessing at the same time.
A blessing in the sense that we were going to have to rearchitect from scratch again anyway for the larger vision.
So all of that original investment money basically was washed down the drain, so to speak.
Yes, we had some customers and all that kind of stuff, but we had to start over.
I got rid of the original outsourced firm.
That arrangement no longer suited us.
It didn't work well.
There were a lot of problems with it, probably beyond the scope of this call here, but enough to say I don't want to use you guys anymore.
And we parted ways.
The original investor.
This is where it begins to, as I reflect back, also have some red flags that I missed back then that I take responsibility for.
Omer (25:30.540)
Before we get into that, I have a few questions about what you just said and thanks for sharing a lot of lessons here.
It sounds like there were a couple of things, and you've told me this before, that you felt that one of the reasons that you feel that this business failed was part of the culture of the Apple ecosystem.
And you gave some examples of that, like how people are conditioned to pay once for an app and never expect to pay for upgrades again.
And how people are kind of really pretty vocal or were very vocal when anybody would try to charge people for some kind of in app purchase to do syncing or something like that.
And I know that was certainly the case many years ago, but sort of looking back recently those kinds of things in the last year or two have become more prevalent.
There's more and more companies doing that.
It's not that uncommon to pay some kind of in app purchase if you want to have some kind of syncing capability.
You know, I think even Evernote does something like that where I think they they let you sync across like one or two devices if you are in a free account, but if you want to sync any more devices than you have to pay.
And so a lot of that has started to change.
And I know a lot of companies out there, I've seen apps that have built quite a strong following.
There was a particularly like a writing app that I use called Ulysses.
Great app Great product, works on iPhone, iPad, there's a Mac version, seamless syncing across the devices.
And I probably spent about 50, $60 to buy all the apps across those platforms.
And then recently, well, recently, I guess sometime last year, they decided that we're moving to a subscription model.
And I'm sure that was a pretty painful thing to do because if you just read anything in the reviews or various forums, you'd have a lot of people pretty upset about that.
But my point is that within that culture of free, there were companies that were kind of making that shift and starting to come up with new business models or re retraining their users or customers to have different expectations.
So why do you think that that wasn't something that you guys were also able to do?
Mike Muhney (28:08.500)
Again, as you look back over the 8 year life of VIP orbit today there are in excess of 3 million apps available at the Apple Store.
If you type in a keyword for what you're looking for, chances are you're going to get, you know, a fairly decent list of results.
And either all of them or many of them, but even if there was only one of them that offered their app for free, the mentality of people, as we discovered as we lived it, is that let's try free first.
If free works, then why pay for something?
But with the proliferation of many results being free, if you were a chargeable one, you had a handicap from the get go.
I ask people to this day and I am going to accuse myself of being the very thing I'm complaining about.
I probably have over 100 apps on my iPhone and I have not paid for any of them, nothing, because I don't need to.
There are so many free, you know, 99 cents is a lot to pay for these days, right?
But people expect from a business solution as VYPR was, you know, the way they ran their daily lives, whether it's personal and or business, depended on, you know, this product for the people and the calendar of activities attached to their relationships.
They were very demanding.
They wanted more feature requests that were posed to us.
I got a lot of emails.
So the demand for an improved product that they didn't pay anything for.
And then if you didn't give outstanding customer support, would trash you on the App Store and Apple would never allow, until recently actually a developer to be able to respond to somebody's trashing you on the store, which you never knew, could have been a competitor for all you knew or somebody that just was upset with you, you had no recourse.
And so it was out there in perpetuity.
So you had some of these artificial outside of your ability to do anything with obstacles.
And so that's one aspect of it.
The other thing to your question, Omer, is in the original, let's call it pricing model built into Viper again, this one time charge and Apple not allowing subscriptions back then we were not able to architect, nor did we architect even in this second iteration of it with the new development team, the ability to have a subscription pricing scheme which if we had done so we would have needed to have taken off of the Apple Store and basically become a cloud version which would have capitalized on the enormous at this time and growing Android user base throughout the world and all of the advantages therein from being cloud based.
The other thing that we had made a mistake of that we didn't keep up with that was part and parcel to this is it was an individual user product for most of the life of the company.
So there was no administrative capability built in where you could go, where we could go to a company and say look, how many people could use this?
200.
Well, here's the administrator's capability to pay where the company can Pay for all 200 licenses or whatever and the individual users themselves didn't need to worry about payment.
In our case, where people wanted to use it from within a company for company purposes, every individual had to pay.
Well, that was an awkward situation.
And so the pricing model, the business model, if you will, began to fall apart against now beginning to penetrate the business aspects of what our vision was, which was exacerbated when we finally came out with the ability to collaborate with other users.
Selected Orbits.
It was built on an Orbit architecture which meant an Orbit could be anything you wanted to.
You could group people many different ways and not forget them in any capacity at all.
And then what you could do with members of an Orbit productively, well, that was like a selective individual CRM system.
It was now more attractive to businesses because of that and the agility the Orbit architecture facilitated but without the ability for a company to pay for it.
And of course then the other aspect of that Omer, is not everybody in the company is an Apple user.
An iPhone or iPad.
If you didn't have any Apple device and I wanted to collaborate with you and you were an Android user, I was out of luck.
And people began to say from a business standpoint, where is your cloud version?
Well, by this time we were well out of money and on our final legs struggling to stay alive.
And I just never could get there.
So I'm giving you kind of a spectrum, sprinkling across a spectrum if you will, of some of the elements that I wish I could undo or we had transitioned faster, failed faster, whatever you want to call it to get to the cloud.
I mean, for example, when iOS7 was announced, rather than saying we've got to re architect for Apple, it really is at that point that we should have said this is the point, we need to go to the cloud and not be Apple only.
And we didn't because we were so entwined in now the Apple ecosystem.
And you know, I hold myself responsible for that.
Omer (33:42.400)
So when you say go to the cloud, you mean it's more of a mindset change that we are now.
Let's call it a cloud based, web based product that you can use in your browser, you can use on any mobile device as and when, you know, we build in the capability, there still happens to be an iPhone app, but it's not, you're not leading with the iPhone app.
You're kind of shifting that thinking to something completely independent of that.
Mike Muhney (34:10.520)
That is absolutely correct.
Yeah.
And all the advantages you can take care of being in the cloud.
I mean the cloud is always on, as we all know.
And again, over the past eight years the market has completely embraced today the cloud, whereas eight years ago it wasn't anywhere near that same attitude that exists today.
So there was this migration in accepting the cloud and all the benefits from it, but also what you give up with it in order to be more productive and proficient.
And so, yeah, that's what I'm talking about.
The ability to be device agnostic and enable all users around the entire world.
Because who doesn't network manage, right?
Not everybody's in sales, but everybody has networks that they mingle in and are part of and are trying to grow because that's where we drive our livelihoods from, no matter who you are or what you do.
Right.
And there was a bigger market that I wanted to go after that I could have had we gotten to the cloud.
And again I just, I was stuck for a variety of reasons and never got there.
Omer (35:16.280)
In terms of the, the outsourcing firm that you use for development, was that something that you continued to do throughout the course from the point you launched to the point that you had to shut down the business?
Mike Muhney (35:31.400)
Here's what happened.
And again, sometimes great intentions, honorable, commendable intentions, even sometimes are a reason for failure ultimately.
So what happened is the original investor, who was the prominent investor in VIP Orbit himself, is a very technical person.
He has an electrical engineering degree.
He started an enterprise software company dealing with business process management, BPM, as it's referred to, almost 25, 30 years ago, and it is a global company today.
He also holds a patent in artificial intelligence.
So a very smart technical guy.
Well, one of the things that he said to me back then was in order to save some cost, and that is by means of not having to have a full time CTO or CTO type, if you will, he would be the acting CTO and kind of, you know, review the work that the original outsourced firm did, although that never really happened as intended because they wouldn't allow us to interfere with their work, which is part of the reason I got rid of them.
But I say that to say when we made the decision to go a different route, the easiest path sometimes is the wrong decision.
But the easiest path back then was there were two guys that he knew who had at one time worked for him, and I'm talking about in Vienna, Austria, that were talented in the mobile world.
And he talked with them to see if we could exclusively hire them under a two year employment contract, even though they were to remain independent agents.
Well, the answer was yes.
They were excited to be creative and build this thing, et cetera, from scratch and employ their own UI and UX that they brought to the table as well, which they did.
So we hired them under this two year employment contract for a while and I had a product manager here in the States and that product manager who obviously had worked with the original firm, now began to work with these two guys.
In addition to the two guys, though, they began to realize that the scope of what we needed to do was larger than just the two of them could do.
So they had worked in times past with a Slovakian outsource firm that they highly regarded and respected.
So we also brought them into the mix as far as part of the development team.
So now I had a hybrid.
But what I didn't have, and I reflect back on this as another problem that I wish I could have changed, is that geographically, from a time zone standpoint and distance standpoint, it literally was a contributor, in my opinion, to the ultimate demise of my company.
In retrospect, I wish I had had my own on my payroll.
My people like we had with, act right here, that I could mingle with each and every day.
Now, I'm not saying that every one of them would need to be physically here in the Dallas Fort Worth area where I live, but at least one of them would be.
And of course, with the benefit of Skype and things like that to stay in touch.
So the distance created a factor.
But there was an assumptiveness here too, structurally, that ultimately contributed to the demise.
And that is that because my investor was the acting seat and those two guys had once worked for him and of course they were, you know, Germanic, right?
Culturally, English, their second language kind of a thing, they found it easier and of course with the time zones that they were in, to go to him when they wanted to, which I never really knew when they that happened, or not to ask him questions.
Well, he is such a busy guy that he and I didn't talk as often as in retrospect we should have spoken.
And so there was a lot of assumptiveness here, omer to who was managing the developers.
And the fact of the matter is there was not diligent oversight provided with them toward them from either one of us, that being the acting CTO investor and myself, until it was too late.
So we would get down to a certain investment amount that had been paid them along with the code being that much further along, only to realize how did this happen?
And then now you spend time undoing some things which caused product delays and the whole structure fell apart.
Part of the awkwardness that the developers though, and I'll give them the benefit of the doubt because I'm not really blaming anybody here, this is a combination of a lot of errors by a lot of people that amounted to failure.
But if I were in their shoes, of course I would go to the investor right there that they had once worked for.
They knew he was the main benefactor of the company and so he was the one ultimately writing the check, so to speak.
And so they took his word for everything.
Well, if he and I weren't talking enough about product features and designs and purpose, et cetera, et cetera, they assumed that we were, when in fact we weren't.
And it's not that we purposely avoided each other, we had a great relationship, but he was just a very busy guy and left it to the developers thinking that they understood what his intentions were.
So the whole thing from a communication standpoint basically began to unravel until it was just too late.
In addition, they discovered that the architecture of this bigger vision was so complicated that I had with them a year and a half delay in going from the single user version of the re architected Vyper to the collaborative version.
That means between a year lost from the original outsourced firm taking a year to create the sync engine and then add with the second development group, a year and a half development delay.
Ultimately I had two and a half years of development delays, two and a half years of burn that I could not recoup.
And during that time, obviously you don't market yourself very much because you're waiting for the product to finally be releasable.
And then when they would deliver that, it wasn't up to speed.
So we just kept pouring more and more money into development and more and more delays until I couldn't raise any more money.
And that was just part of the journey as I look back on it here.
Omer (42:23.560)
So other than not letting your investor become a part time cto, which I think was kind of a big factor here, because it just left.
It sounds like there was a lot of, there was huge lack of clarity on who was accountable for following through and making sure that things were getting done the way they were supposed to be getting done.
Do you think in hindsight or if you were doing this again in future, you would be having a full time cto, somebody doing nothing but being fully accountable for the execution of the product
Mike Muhney (43:02.610)
100%, whether I titled them CTO or not.
The function that we're describing here, yes, I would definitely have my own full time person on top of this as the liaison between myself and the developers and treat it appropriately.
One of the things I didn't mention.
So think about the awkwardness of this situation, Omer.
So with the main investor, the acting cto, he was also a board of director.
Now, as CEO of the company, I obviously was accountable to my board of directors, the two largest investors in the company.
And I deferred to them, obviously.
No, not that we ever disagreed, but obviously I deferred to them.
Well, at the same time he was my acting cto.
And if he had been a different person as the CTO only, I would have taken a different tact with dealing with these product delays and issues that had been emerging because I would have been on top of it more.
But because he lives in Austria, he was the acting cto.
And all these assumptions I described, you see how there wasn't any communication frequent enough and clear enough to know precisely what's happening, where are we at, against where we think we should be, et cetera, et cetera.
And so I was between a rock and a hard place.
On the one side of me, he was my board of director and biggest benefactor.
I'm grateful to him for that.
On the other side, he was the seat acting CTO and I should have gotten on his Case for the development team not producing in a fashion that I had been expecting.
And so again, you could see, though, why the developers themselves were in that same situation.
Who's really the boss here?
Is it Mike?
Is it Max?
Who is it?
Well, Max was the easy guy because again, they had known him, they're Austrian and they were on the same time zone.
So I would never have a situation like that again where I wasn't in control with my own people, including a CTO to manage the development process.
Omer (45:15.210)
So back in the 80s, you had a startup that failed, and from that you turned things around and you saw huge success with act, you're back in that situation again with a startup that's now failed and shut down.
So what's next for you?
Where are you going?
Mike Muhney (45:35.700)
Well, going back to that opening question you asked me about quotes I live by, I'll again say the two of them.
Of all sad words of tongue or pen, the saddest are these, what might have been.
So I still have a yearning to achieve way beyond what I have accomplished in my life.
I could say, obviously, with the story of ACT and the industry it created, and ACT is still in the market today after 31 years, obviously a legacy that even astounds Pat and me to this day.
I want to leverage off of that, but I do not want that to define my life.
I have a saying, Omer, that success should be a springboard and not a hammock.
In other words, I do not want to rest on my past successes.
I want to use them to launch into even greater things.
Because if I could do something like act, what more am I capable of doing that I haven't yet discovered?
So I have that.
Let's just call it a youthfulness, a vigor, a determination to go beyond what I've accomplished and see what is left in me.
And I don't want to have failure slow me down.
That is the Churchill quote.
Success is not final, failure is not fatal.
It is the courage to go on that counts.
Well, my courage today with another love that began to emerge back in the release of the ACT era, where I was the face of act.
I was the one that spoke all over the world and learned to publicly speak.
And in that process, I learned that I loved public speaking and have been the keynote speaker all over the world at many events, large and small.
I've been televised, et cetera.
So I discovered it as another passion of mine.
So, to answer your question, I have started a new business.
The business is me as a professional speaker now talking about A variety of things.
Sharing my experiences, my insight from an entrepreneurial standpoint, both good and bad.
I mean, there was a high price I paid for success that we didn't even get into.
With that, I lost a 19 year marriage three years before we sold the company.
Pat and I lost our best friendship because as parents you don't always agree on how you bring up the child.
Even though we loved our child act, we began to let our egos get in the way.
So I lost two key relationships.
Think of the irony of that against a product design to create more meaningful and effective relationships.
Right.
So I've paid a heavy price, price and more toward the pursuit of success.
I no longer am a man after success.
I'm a man after finding meaning in my life and making an impact, whatever that is.
And the path I've chosen to now do that with is public speaking, professional speaking, obviously inspirational.
Obviously I can talk about anything and everything sales related, especially going back to my IBM mainframe era training, you know, which is transcends time.
But it's a passion I have and I'm devoting full time to it now.
Like any business, I'm still doing the hustle, but I'm loving the hustle and that's what I'm up to these days.
Omer (48:47.270)
That's awesome.
Now, you know, I really appreciate you being open and being willing to talk about failure.
There's a lot of people who would not be comfortable or have the courage to do that.
And you know, you and I have known each other for, for a little while now and I know that it's just going to be a matter of time that before you, you bounce back and, and find that, that next thing that as you said, kind of gives you the feeling of being alive and having, being fulfilled.
So, you know, I wish you all the best with what you're doing with, with speaking and, and you know, I look forward to staying in touch as you kind of take this new path in your life.
Let's wrap up.
I want to go into the lightning round.
You've kind of been here before, but I'm going to ask you seven questions and just try to answer them as quickly as you can.
So you ready?
Mike Muhney (49:42.780)
Okay, I'm ready.
Omer (49:44.299)
What's the best piece of business advice that you've ever received to go have a breakfast?
Mike Muhney (49:50.220)
The July 4, 1986 breakfast.
I mean, despite my failure, despite my, despite the grieving that I've gone through with having to shut VIP orbit down, I still am appreciative for taking the advice of that man and having that breakfast.
So that was as it affected my life and my credential to this day, ACT is still and always will be a credential.
That's the thing I'm most appreciative for.
Omer (50:13.760)
What book would you recommend to our audience and why?
Mike Muhney (50:17.120)
I really love the book Team of Teams, written by an ex Army General, General Stanley McChrystal.
It's all about collaboration and it's about a disruptiveness that we've kind of taken for granted today in the market.
So Team of Teams is a book I would highly recommend.
Omer (50:33.800)
What's one attribute or characteristic in your mind of a successful entrepreneur?
Mike Muhney (50:39.000)
Sheer determination.
I mean damn the torpedoes, full speed ahead.
We all know the statistically that 95% of entrepreneurial ventures will fail and yet it doesn't stop the people that just have a fire in their belly.
And you know, I'm proud of being an entrepreneur despite success and or failure because it's all about that ability to create your own path.
And coming from the corporate world, I'm proud to be in the core of entrepreneurs.
Omer (51:08.770)
What's your favorite personal productivity tool or habit?
Mike Muhney (51:13.010)
It's more than a tool, it's an attitude.
My attitude is always has been and of course the software that I created, both ACT and Viper reflected it is that people matter.
Omer and notice I didn't say customers matter.
I have always had an attitude that people matter and to treat people with respect and courtesy and interest, genuine interest from which, you know, the sky's the limit as far as what potential exists between two people that begin to, you know, walk a past and together, whether it's his friends or his business associates.
I mean Pat and I serendipitously moved into the same apartment complex two doors apart when we both graduated from college, that both started our career in sales and hit it off as best friends.
And that led to wanting to have a company and that led to the invention of act that led to a lifetime credential for the both of us that changed the world and created a global industry.
There's a perfect example of the infinite potential of closer relationships.
So I view things more attitudinally and heartfully than I do mechanically via tools.
Tools are just that, they're tools.
But I can still accomplish things without a tool.
I don't need a CRM system to have the right attitude to create meaningful, genuine, effective relationships from which all of our reputations and opportunities emerge.
Omer (52:36.980)
What's a new or crazy business idea you'd love to pursue if you had the extra time.
Mike Muhney (52:42.500)
Well, I would love to create the cloud version of where I got to.
And in fact, I own the URL now, so I'll tell you the name of it.
I've even come up with the name.
It's Gluzed G L U Z E D Gluz dot com.
You know, it's kind of a verb, or it could be a verb, you know, like Google.
It's a little bit of playful and it does convey glue, which is a bonding.
You know, it's all about bonding, people bonding emotionally together for these relationships.
And so I would love to still go forth with the software idea straight to the cloud and continue the journey that I began with VIP orbit.
Omer (53:19.900)
So watch this space.
It's not over yet.
Mike Muhney (53:22.860)
It's not over yet.
But Gluz does depend on getting some angel investors.
So if I can't do that, then, then glues will never see the light of day.
But again, I have at least a divergent passion of the speaking that I'm doing.
So I'm finding purpose and I'm finding, you know, meaningfulness to wake up every day and get out there and, and just see how I can shake things up.
Omer (53:46.950)
What's an interesting or fun fact about you that most people don't know?
Mike Muhney (53:51.190)
Here's a fun one.
When I was an IBMer, I inherited an account that I told my manager I never wanted to have to go visit.
And he said, okay, you never have to unless they call you and want you to come out and see him.
And unfortunately, one day they did.
It was a nudist colony.
And so one of my accounts as an IBM or walking in with a navy blue suit and 15 pound wingtips was I literally had to meet with a bunch of nudists and the owner of the nudist company with a lot of them standing around and all the gl.
All the tabletops were see through glass, so everything was transparent.
Right.
And I never, and I never lived it down as an IBM or to, you know, my, my associates.
So there's a fun fact about me, and I will say this on that topic.
Nudist colonies are not what you imagine them to be.
A matter of fact, most people shouldn't be walking around naked because it's an embarrassment.
Omer (54:50.230)
And finally, what is one of your most important passions outside of your work?
Mike Muhney (54:54.550)
You know, just family, the typical family and friends and golf and hitting the ball and, you know, taking out some of my aggression.
But, but, you know, having that competitiveness evidence throughout the sport, which what I love about it is I can play golf with my grandkids.
And you can't do many things like that, you know, at my age.
With your grandkids.
Omer (55:14.150)
Totally.
All right, cool.
Mike, thank you again for coming back and, you know, sharing the lessons that you've learned from this roller coaster of a ride.
Now, if people want to find out more about what you're up to, they can go to Mike muni, which is Mike M u h N-E-Y.com and I'll include a link to that in the show notes.
And if people want to get in touch with you, what's the best way for them to do that?
Mike Muhney (55:41.140)
My email address is very simple.
Mikemuni.com Wonderful.
Omer (55:47.380)
I wish you all the best.
Look forward to staying in touch and I'll keep an eye on that glued domain.
Mike Muhney (55:53.620)
All right, well, Omar, let me at this time express my appreciation for you as well.
I know that you've got a lot of options of other people with great success stories.
You took a risk yourself and, and having somebody like me on to talk a little bit about failure, but you know, the truthfulness and reality of it.
And so I commend you for that and just want to express my appreciation.
Omer (56:14.540)
Thank you.
I appreciate that, Mike.
Cheers.
